CARDINAL HEALTH INC

2. Acquisitions

Solaris Health

On November 3, 2025, we, through The Specialty Alliance, completed the acquisition of Solaris Health, a urology MSO, for a purchase price of approximately $1.9 billion in cash, subject to certain adjustments. In connection with the closing of this transaction, we issued common units in The Specialty Alliance to certain physicians and members of management which are estimated to have a grant date fair value of approximately $500 million, a portion of which will be recognized as post-combination expense within acquisition-related cash and share-based compensation costs. We have accounted for the acquisition of the ownership interest in Solaris as a business combination in accordance with ASC 805.

Solaris Health includes more than 750 providers across more than 250 practice locations in 14 states. Solaris Health is part of The Specialty Alliance, our multi-specialty MSO platform, and their results are reported within our Pharma segment. With the closing of this transaction, we own approximately 76% of The Specialty Alliance.

Transaction and integration costs associated with the Solaris acquisition were $37 million and $40 million during the three and six months ended December 31, 2025, respectively.

Advanced Diabetes Supply Group ("ADS")

On April 1, 2025, we completed the acquisition of ADS for a purchase price of approximately $1.0 billion in cash, subject to certain adjustments.

Transaction and integration costs associated with the ADS acquisition were $3 million and $7 million during the three and six months ended December 31, 2025, respectively.

GI Alliance ("GIA")

On January 30, 2025, we completed the acquisition of 73% ownership interest in GIA for a purchase price of approximately $2.8 billion in cash. Beginning on the third anniversary of the closing, we have the ability to exercise a call right to purchase up to 100 percent of the remaining outstanding interests.

Additionally, on May 30, 2025, we, through The Specialty Alliance, completed the acquisition of Urology America for a purchase price of $381 million in cash and equity in The Specialty Alliance.

Transaction and integration costs associated with the GIA and Urology America acquisitions were $2 million and $7 million during the three and six months ended December 31, 2025, respectively.

Integrated Oncology Network ("ION")

On December 2, 2024, we completed the acquisition of ION for a purchase price of $1.1 billion in cash.

Transaction and integration costs associated with the ION acquisition were $1 million and $18 million for the three months ended December 31, 2025 and 2024, respectively, and $2 million and $20 million during the six months ended December 31, 2025 and 2024, respectively.

Fair Value of Assets Acquired and Liabilities Assumed

The allocation of the purchase price for the acquisitions of Solaris Health, Urology America, ADS, and GIA are not yet finalized and are subject to adjustment as we complete the valuation analysis of these acquisitions. The purchase prices are also subject to adjustment based on working capital requirements as set forth in the acquisition agreements.

The allocation of the fair value of assets acquired and liabilities assumed for the ION acquisition was finalized during the six months ended December 31, 2025, resulting in goodwill of $1.1 billion and the noncontrolling interest for ION was recognized at the acquisition-date fair value of $157 million.

Notes to Financial Statements

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date for Solaris Health, Urology America, ADS, GIA and ION:

(1) The weighted-average useful life of customer intangibles is 10 years.

(2) The weighted-average useful life of trade names ranges from 2 years to 10 years.

(3) The weighted-average useful life of non-competition agreements is 5 years.

The valuation of identifiable intangible assets utilizes significant unobservable inputs and thus represents a Level 3 nonrecurring fair value measurement. The discount rates used to arrive at the present values of the identifiable intangible assets for Solaris Health, Urology America, ADS, GIA, and ION ranged from 7 to 20 percent and reflect their internal rates of return and uncertainty in the cash flow projections, which is reflective of market participant assumptions.

The estimated fair value of ADS customer intangibles (payor contracts) were determined using a multi-period excess earnings method, which estimates an intangible asset's value based on the present value of the incremental after-tax cash flows (or “excess earnings”) attributable only to the intangible asset.

The fair value of the Solaris Health, Urology America, ADS, GIA and ION trademark intangible assets were determined utilizing the relief from royalty method, an income-based approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the trademarks and discounted to present value using an appropriate discount rate.

The fair value of the non-compete intangibles acquired from Solaris Health and GIA were determined by applying the differential cash flow method which compares the present value of cash flows with and without the non-compete agreements in place.

The vested Specialty Alliance Units, formerly referred to as GIA Units, issued in relation to the GIA acquisition were recognized at their acquisition date fair value of $739 million and are included in deferred income taxes and other liabilities in the consolidated balance sheet. The Specialty Alliance Units issued and included in the purchase price of the Solaris acquisition were recognized at their acquisition date fair value of $210 million and are included in deferred income taxes and other liabilities in the consolidated balance sheet. The valuation of The Specialty Alliance Units utilizes significant unobservable inputs and thus represents a recurring Level 3 fair value measurement. The fair value of The Specialty Alliance Units in relation to the GIA acquisition was determined using a discount rate of 9.5% and an estimated weighted average service periodtwo years. The fair value of The Specialty Alliance Units in relation to the Solaris acquisition was determined using a discount rate of 7.5% and an estimated service period offive years.

Notes to Financial Statements

3. Restructuring and Employee Severance

The following tables summarize restructuring and employee severance costs:

Employee-related costs primarily consist of termination benefits provided to employees who have been involuntarily terminated, duplicate payroll costs, and retention bonuses incurred during transition periods. Facility exit and other costs primarily consist of project consulting fees, accelerated depreciation, professional project management, and costs associated with vacant facilities.

During the three and six months ended December 31, 2025 and 2024, restructuring and employee severance costs were primarily related to the implementation of certain enterprise-wide cost-savings measures and certain initiatives to rationalize our manufacturing operations.

The following table summarizes activity related to liabilities associated with restructuring and employee severance:

4. Goodwill and Other Intangible Assets

Goodwill

The following table summarizes the changes in the carrying amount of goodwill by segment and in total:

(1) Comprised of the remaining operating segments, Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight® Logistics.

Goodwill increased in the six months ended December 31, 2025 primarily due to the Solaris acquisition in the Pharma segment. Goodwill recognized in connection with the acquisition primarily represent the expected benefits from the expected growth from new customers, the assembled workforce of the acquired entities and synergies of integrating these businesses. Substantially all of the goodwill recorded is expected to be non-deductible for income tax purposes.

Purchased goodwill is tested for impairment annually or when indicators of impairment exist. Goodwill impairment testing involves a comparison of the estimated fair value of reporting units to the respective carrying amount.

As described in Note 2, the purchase price and assumed fair value of acquisitions is allocated to specific assets, resulting in the carrying amount approximating the fair value as of the acquisition date. Accordingly, we expect minimal excess of estimated fair value over carrying value for recent acquisitions. We will continue to evaluate acquisitions and the related reporting units for indicators of impairment.

Notes to Financial Statements

Other Intangible Assets

The following tables summarize other intangible assets by class at:

Total amortization of intangible assets was $84 million and $69 million for the three months ended December 31, 2025 and 2024, respectively, and $171 million and $137 million for the six months ended December 31, 2025 and 2024, respectively.

The following table summarizes the estimated amortization expense for the remainder of fiscal 2026 through fiscal 2030:

5. Long-Term Obligations and Other Short-Term Borrowings

The following table summarizes long-term obligations and other short-term borrowings at:

(1) Maturities are presented on a calendar year basis.

Maturities of existing long-term obligations and other short-term borrowings for the remainder of fiscal 2026 through fiscal 2030 and thereafter are as follows:

Notes to Financial Statements

Long-Term Debt

We had total long-term obligations, including the current portion and other short-term borrowings, of $9.0 billion and $8.5 billion at December 31, 2025 and June 30, 2025, respectively. All the notes represent unsecured obligations of Cardinal Health, Inc. and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. Interest is paid pursuant to the terms of the obligations. These notes are effectively subordinated to the liabilities of our subsidiaries, including trade payables of $39.0 billion and $34.7 billion at December 31, 2025 and June 30, 2025, respectively.

In August 2025, we issued additional debt, with the aggregate principal amount of $1.0 billion, to fund a portion of the consideration payable in connection with the Solaris Health acquisition and for general purposes. The notes issued are $600 million aggregate principal amount of 4.5% Notes that mature on September 15, 2030 and $400 million aggregate principal amount of 5.15% Notes that mature on September 15, 2035. The proceeds of the notes issued, net of discounts, premiums, and debt issuance costs, were approximately $1.0 billion.

During the three months ended September 30, 2025, we repaid the full principal of $500 million of the 3.75% Notes due 2025 at maturity with available cash.

If we undergo a change of control, as defined in the notes, and if the notes receive specified ratings below investment grade by each of Standard & Poor's Ratings Services, Moody's Investors Services, and Fitch Ratings, any holder of the notes, excluding the debentures, can require with respect to the notes owned by such holder, or we can offer, to repurchase the notes at 101% of the principal amount plus accrued and unpaid interest.

Other Financing Arrangements

In addition to cash and equivalents and operating cash flow, other sources of liquidity at December 31, 2025 include a $3.0 billion commercial paper program backed by a $2.0 billion revolving credit facility that expires in February 2028 and a $1.0 billion 364-Day revolving credit facility that expires in October 2026. We also had a $1.0 billion committed receivables sales facility through September 2028. At December 31, 2025, we hadno amounts outstanding under our commercial paper program, revolving credit facility, or our committed receivables sales facility.

In September 2025, we renewed our committed receivables sales facility program through Cardinal Health 23 Funding, LLC (“CHF”) through September 28, 2028.

In October 2025, we renewed the 364-Day revolving credit facility, under which we have access to $1.0 billion of committed liquidity through October 6, 2026.

Our revolving credit and committed receivables sales facilities require us to maintain a consolidated net leverage ratio of no more than 3.75-to-1. As of December 31, 2025, we were in compliance with this financial covenant.

6. Commitments, Contingent Liabilities and Litigation

Commitments

Generic Sourcing Venture with CVS Health

In July 2014, we established Red Oak Sourcing, LLC ("Red Oak Sourcing"), a U.S.-based generic pharmaceutical sourcing venture with CVS Health for an initial term of 10 years. Red Oak Sourcing negotiates generic pharmaceutical supply contracts on behalf of its participants. In August 2021, we amended our agreement to extend the term through June 2029. We are required to make quarterly payments to CVS Health for the term of the arrangement.

Contingencies

New York Opioid Stewardship Act

In 2018, the State of New York adopted the Opioid Stewardship Act (the "OSA"), which created an aggregate $100 million annual assessment on all manufacturers and distributors that was assessed based on each manufacturer or distributor's share of the total morphine milligram equivalents sold or distributed in New York, the applicability of which was ultimately limited to two years (2017 and 2018).

Since fiscal 2021, we have made certain payments to New York State for our portion of the assessment. However, we, and other distributors, challenged the OSA as unconstitutional. In May 2024, the New York Appellate Division held that the 2017 assessment was unconstitutionally retroactive, directing a refund of assessments paid for calendar year 2017, but upheld the 2018 assessment. In fiscal 2025, both parties agreed to a final settlement and in December 2025, we received payment and recognized a gain of $17 million in distribution, selling, general and administrative expenses in our condensed consolidated statements of earnings.

Legal Proceedings

We become involved from time to time in disputes, litigation and regulatory matters.

From time to time, we determine that products we distribute, source, manufacture or market do not meet our specifications, regulatory requirements, or published standards. When we or a regulatory agency identify a potential quality or regulatory issue, we investigate and take appropriate corrective action. Such actions

Notes to Financial Statements

have led to product recalls, costs to repair or replace affected products, temporary interruptions in product sales, restrictions on importation, product liability claims and lawsuits and can lead to action by regulators. Even absent an identified regulatory or quality issue or product recall, we can become subject to product liability claims and lawsuits.

From time to time, we become aware through employees, internal audits or other parties of possible compliance matters, such as complaints or concerns relating to accounting, internal accounting controls, financial reporting, auditing, or other ethical matters or relating to compliance with laws such as healthcare fraud and abuse, anti-corruption or anti-bribery laws. When we become aware of such possible compliance matters, we investigate internally and take appropriate corrective action. In addition, from time to time, we receive subpoenas or requests for information from various federal or state agencies relating to our business or to the business of a customer, supplier or other industry participants. Internal investigations, subpoenas or requests for information could directly or indirectly lead to the assertion of claims or the commencement of legal proceedings against us or result in sanctions.

We have been named from time to time in qui tam actions initiated by private third parties. In such actions, the private parties purport to act on behalf of federal or state governments, allege that false claims have been submitted for payment by the government and may receive an award if their claims are successful. After a private party has filed a qui tam action, the government must investigate the private party's claim and determine whether to intervene in and take control over the litigation. These actions may remain under seal while the government makes this determination. If the government declines to intervene, the private party may nonetheless continue to pursue the litigation on his or her own purporting to act on behalf of the government.

We accrue for contingencies related to disputes, litigation and regulatory matters if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because these matters are inherently unpredictable and unfavorable developments or resolutions can occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review contingencies to determine whether our accruals and related disclosures are adequate. The amount of ultimate loss may differ from these estimates.

We recognize income from the favorable outcome of litigation when we receive the associated cash or assets.

We recognize estimated loss contingencies for certain litigation and regulatory matters and income from favorable resolution of litigation in litigation (recoveries)/charges, net in our condensed consolidated statements of earnings; however, losses and recoveries of lost profits from disputes that occur in the ordinary course of business are included within segment profit.

Opioid Lawsuits and Investigations

As of December 31, 2025, we have $4.3 billion accrued for the opioid-related matters described below, of which $477 million is included in other accrued liabilities and the remainder is included in deferred income taxes and other liabilities in our condensed consolidated balance sheets. During the six months ended December 31, 2025 and fiscal year 2025, we made payments totaling $403 million and $798 million, respectively, which included our annual payments under the agreement to settle the vast majority of the opioid lawsuits filed by states and local governmental entities and payments related to the settlement agreement with the City of Baltimore and classes of third-party payors and acute care hospitals.

During the six months ended December 31, 2025 and fiscal year 2025, there were no material expenses recognized for these matters.

States & Political Subdivisions

In April 2022, we along with two other national distributors (collectively, the "Distributors"), without admitting liability or wrongdoing, became parties to National Opioid Settlement Agreement ("the NOSA") to settle the vast majority lawsuits and claims brought by states and political subdivisions related to the distribution of opioid pain medications. In addition to the Distributors, parties to the NOSA include 48 states, the District of Columbia and 5 U.S. territories. The NOSA also resulted in the resolution of the opioid-related claims of over 99 percent of political subdivisions in settling states (together with settling states and territories, the "Settling Governmental Entities").

To date, we have paid the Settling Governmental Entities approximately $2.2 billion and we expect to pay the Settling Governmental Entities additional amounts up to $4.1 billion through 2038. As required under the NOSA, a monitor is overseeing compliance with the Injunctive Relief provisions of the NOSA until 2027 and the distributors have engaged a third-party vendor to act as a clearinghouse for data aggregation and reporting, which distributors will fund until 2032.

West Virginia subdivisions and Native American tribes were not a part of the NOSA. In July 2022, we entered into separate agreements to settle the opioid-related claims of the majority of remaining West Virginia subdivisions and Native American Tribes for approximately $124 million over eleven years and $136 million over five years, respectively.

We have now resolved the opioid-related claims of all 50 states and the District of Columbia; however, lawsuits brought by certain subdivisions remain outstanding.

In July 2022, a judgment in favor of the Distributors was entered in a bench trial before a federal judge in West Virginia in a case brought by Cabell County and City of Huntington. In October 2025, the United States Court of Appeals for the Fourth Circuit vacated the district court's judgment and remanded the case for further proceedings. A hearing is scheduled for March, 2026. We intend to vigorously defend ourselves in this matter.

Notes to Financial Statements

Private Plaintiffs

The NOSA does not address claims by private parties, which includes unions and other health and welfare funds, hospital systems and other healthcare providers, businesses, and individuals alleging personal injury. To date, there are approximately 193 lawsuits brought by private plaintiffs pending. Of these, approximately 51 are purported class actions. The causes of action asserted by these plaintiffs are similar to those asserted by public plaintiffs. We are vigorously defending ourselves in all of these matters.

Following resolution discussions with certain private plaintiffs, during the six months ended December 31, 2024, Distributors finalized agreements with classes of third-party payors and acute care hospitals. Our portion of these settlements totaled $213 million. The settlement with the class of third-party payors was approved by the court in January 2025 and was finalized in August 2025. The settlement with the class of acute care hospitals was approved by the court in March 2025 and became final in April 2025.

Insurance Litigation

We are involved in lawsuits in Ohio State court with insurers related to their obligations to reimburse us for defense and indemnity costs in connection with the lawsuits described above. A hearing in one of these matters is scheduled for February 5, 2026. An unfavorable outcome in this matter may result in a change in loss reserves related to opioid litigation recorded by our captive insurance company, which would negatively impact cash flow.

During the six months ended December 31, 2025, we received $5 million in insurance recoveries related to opioid matters, which were recorded in the Pharma segment. During fiscal 2025, we received $25 million in insurance recoveries related to opioid matters. $12 million of the recoveries from our insurers were recorded in the Pharma segment. We have not recorded a receivable for any additional recoveries related to these insurance litigation matters as of December 31, 2025.

Department of Justice Civil Investigative Demand

In November 2023, we received a Civil Investigative Demand ("CID") from the Department of Justice focused on potential violations of the Anti-Kickback Statute and False Claims Act in connection with a 2022 transaction in which we purchased a minority ownership interest in a rheumatology managed services organization and a group purchasing organization. We are cooperating with this investigation.

Cordis IVC Filter Matters

We have been named as a defendant in product liability lawsuits involving claims by plaintiffs that allege personal injuries associated with the use of inferior vena cava ("IVC") filter products. These lawsuits sought a variety of remedies, including unspecified monetary damages. The divestiture of the Cordis business did not include product liability related to the IVC filters in the U.S. and Canada, which we retained.

In April 2023, we executed a settlement agreement that will resolve approximately 4,375 claims for $275 million, which we have paid into a qualified settlement fund. Payments to qualified implantees are being made out of the qualified settlement fund and we expect continued payments as additional plaintiffs meet the procedural requirements.

We have also entered into other agreements, which, in addition to the settlement discussed above, resolved the vast majority of IVC filter product liability claims. These settlements did not resolve all IVC filter product liability claims, and we intend to continue to vigorously defend ourselves in the remaining lawsuits.

At December 31, 2025, we had a total of $36 million accrued for losses and legal defense costs, related to the IVC filter product liability lawsuits in our condensed consolidated balance sheets, which includes the $35 million in the qualified settlement fund.

Tax Contingency

On February 2, 2026, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Service (IRS), as part of our ongoing FY15-FY20 audit cycle, related to a restructuring in connection with our July 2017 acquisition of the Patient Recovery business. The IRS is asserting that the transaction should be recharacterized in a manner that could create additional federal income tax liability of approximately $160 million, plus interest. We routinely assess the likelihood of adverse outcomes resulting from audits and examinations to determine the adequacy of our tax reserves and we believe we have adequate reserves for all tax matters; however, the ultimate outcome of disputes of this nature is uncertain and if the IRS were to prevail on its assertions in connection with this matter, the assessed tax and deficiency interest would impact our financial results and cash flow.

Antitrust Litigation Proceeds

We recognized income for net recoveries in class action antitrust lawsuits in which we were a class member or plaintiff of $19 million during both the three and six months ended December 31, 2025 and $16 million and $59 million during the three and six months ended December 31, 2024, respectively.

7. Income Taxes

Fluctuations in our provision for income taxes as a percentage of pre-tax earnings (“effective tax rate”) are due to changes in international and U.S. state effective tax rates resulting from our business mix and discrete items.

Effective Tax Rate

During the three and six months ended December 31, 2025, the effective tax rate was 25.2 percent and 24.7 percent, respectively.

During the three and six months ended December 31, 2024, the effective tax rate was 21.4 percent and 22.2 percent, respectively.

Notes to Financial Statements

Unrecognized Tax Benefits

We had $903 million and $879 million of unrecognized tax benefits, at December 31, 2025 and June 30, 2025, respectively. The December 31, 2025 and June 30, 2025 balances include $877 million and $871 million of unrecognized tax benefits, respectively, that if recognized, would have an impact on the effective tax rate.

At December 31, 2025 and June 30, 2025, we had $77 million and $65 million, respectively, accrued for the payment of interest and penalties related to unrecognized tax benefits, which we recognize in the provision for income taxes in the condensed consolidated statements of earnings. These balances are gross amounts before any tax benefits and are included in deferred income taxes and other liabilities in the condensed consolidated balance sheets.

It is reasonably possible that there could be a change in the amount of unrecognized tax benefits within the next 12 months due to activities of the U.S. Internal Revenue Service ("IRS") or other taxing authorities, possible settlement of IRS and other audit issues, reassessment of existing unrecognized tax benefits or the expiration of statutes of limitations.

Other Tax Matters

We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, and various foreign jurisdictions. With few exceptions, we are subject to audit by taxing authorities for fiscal years 2015 through the current fiscal year.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law, which includes a broad range of tax reform provisions. The OBBBA includes changes to existing tax law, including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act ("Tax Act"). We have evaluated the impact of the OBBBA and determined that it did not have a material effect on the Company’s financial statements for the three and six months ended December 31, 2025. We will continue to assess the implications of the OBBBA as further guidance becomes available but do not expect the legislation to have a material impact on the effective tax rate in future periods.

8. Fair Value Measurements

Assets and Liabilities Measured on a Recurring Basis

The following tables present the fair values for assets and (liabilities) measured on a recurring basis at:

(1)The other investments balance includes investments in mutual funds, which offset fluctuations in deferred compensation liabilities. These mutual funds invest in the equity securities of companies with both large and small market capitalization and high quality fixed income debt securities. The fair value of these investments is determined using quoted market prices.

(2)The fair value of interest rate swaps, foreign currency contracts, and net investment hedges is determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Observable Level 2 inputs are used to determine the present value of expected future cash flows. The fair value of these derivative contracts, which are subject to master netting arrangements under certain circumstances, is presented on a gross basis in prepaid expenses and other, other assets, other accrued liabilities, and deferred income taxes and other liabilities within the condensed consolidated balance sheets.

(3)The shared-based awards are liability-classified awards, as defined under ASC 718, resulting from acquisitions by The Specialty Alliance. These are presented in deferred income taxes and other liabilities within the condensed consolidated balance sheets. The fair value of The Specialty Alliance Units is determined using the discounted cash flow method which utilizes significant unobservable inputs, including the discount rate of 7.5%. Significant changes to assumptions used in the valuation may have a material impact on the fair value of The Specialty Alliance Units.

Changes in Level 3 Recurring Fair Value Measurements

The following tables reconcile the changes in fair value for the liabilities classified within Level 3 of the fair value hierarchy for the three and six months ended December 31, 2025:

Notes to Financial Statements

(1)For the three and six months ended December 31, 2025, there was $56 million and $119 million of expense, respectively, recorded to acquisition-related cash and share-based compensation costs in the condensed consolidated statements of earnings.

9. Financial Instruments

We utilize derivative financial instruments to manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative instruments include interest rate risk and currency exchange risk. We do not use derivative instruments for trading or speculative purposes. While the majority of our derivative instruments are designated as hedging instruments, we also enter into derivative instruments that are designed to hedge a risk but are not designated as hedging instruments. These derivative instruments are adjusted to current fair value through earnings at the end of each period. We are exposed to counterparty credit risk on all of our derivative instruments. Accordingly, we have established and maintain strict counterparty credit guidelines and only enter into derivative instruments with major financial institutions that are rated investment grade or better. We do not have significant exposure to any one counterparty and we believe the risk of loss is remote. Additionally, we do not require collateral under these agreements.

Interest Rate Risk Management

We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities on our fixed-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.

Currency Exchange Risk Management

We conduct business in several major international currencies and are subject to risks associated with changing foreign exchange rates. Our objective is to reduce earnings and cash flow volatility associated with foreign exchange rate changes to allow management to focus its attention on business operations. Accordingly, we enter into various contracts that change in value as foreign exchange rates change to protect the value of existing foreign currency assets and liabilities, commitments, and anticipated foreign currency revenue and expenses.

Fair Value Hedges

We enter into pay-floating interest rate swaps to hedge the changes in the fair value of fixed-rate debt resulting from fluctuations in interest rates. These contracts are designated and qualify as fair value hedges. Accordingly, the gain or loss recorded on the pay-floating interest rate swaps is directly offset by the change in fair value of the underlying debt. Both the derivative instrument and the underlying debt are adjusted to market value at the end of each period with any resulting gain or loss recorded in interest expense, net in the condensed consolidated statements of earnings. For the three and six months ended December 31, 2025 and 2024, there wereno gains or losses recorded to interest expense as changes in the market value of our derivative instruments offset changes in the market value of the underlying debt.

During the six months ended December 31, 2025, we entered into pay-floating interest rate swaps with total notional amounts of $300 million. These swaps have been designated as fair value hedges of our fixed rate debt and are included in deferred income taxes and other liabilities in our condensed consolidated balance sheets.

Cash Flow Hedges

We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to interest rate and foreign currency fluctuations associated with certain forecasted transactions. These derivative instruments are designated and qualify as cash flow hedges. Accordingly, the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings.

Gains and losses recognized in other comprehensive income were immaterial for both the three and six months ended December 31, 2025 and 2024, respectively. Gains and losses recognized in accumulated other comprehensive loss and reclassified into earnings were immaterial for both the three and six months ended December 31, 2025 and 2024, respectively. Gains currently included within accumulated other comprehensive loss associated with our cash flow hedges to be reclassified into net earnings within the next 12 months are immaterial.

Notes to Financial Statements

Net Investment Hedges

We hedge the foreign currency risk associated with certain net investment positions in foreign subsidiaries. To accomplish this, we enter into cross-currency swaps that are designated as hedges of net investments.

In September 2025, we entered into ¥18 billion ($120 million) cross-currency swaps maturing in September 2027.

In September 2025, we terminated the ¥18 billion ($120 million) cross-currency swaps entered into in September 2023 and received settlement in cash of $3 million, recorded in our condensed consolidated statements of cash flows.

In December 2025, we partially terminated the €32 million ($37 million) cross-currency swaps entered into in March 2023 and paid a settlement in cash of $3 million, recorded in our condensed consolidated statements of cash flows.

Cross-currency swaps designated as net investment hedges are marked to market using the current spot exchange rate as of the end of the period, with gains and losses included in the foreign currency translation component of accumulated other comprehensive loss until the sale or substantial liquidation of the underlying net investments. To the extent the cross-currency swaps designated as net investment hedges are not highly effective, changes in carrying value attributable to the change in spot rates are recorded in earnings.

Pre-tax gains and losses from net investment hedges recorded in the foreign currency translation component of accumulated other comprehensive loss were immaterial during both the three and six months ended December 31, 2025 and 2024, respectively. Gains recognized in interest expense, net in the condensed consolidated statements of earnings for the portion of the net investment hedges excluded from the assessment of hedge effectiveness were immaterial during both the three and six months ended December 31, 2025 and 2024, respectively.

Economic (Non-Designated) Hedges

We enter into foreign currency contracts to manage our foreign exchange exposure related to sales transactions, intercompany financing transactions and other balance sheet items subject to revaluation that do not meet the requirements for hedge accounting treatment. Accordingly, these derivative instruments are adjusted to current market value at the end of each period through earnings. The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability. The settlement of the derivative instrument and the remeasurement adjustment on the foreign currency denominated asset or liability are both recorded in other income, net. We recorded immaterial gains and losses during both the three and six months ended December 31, 2025 and 2024, respectively. The principal currencies managed through foreign currency contracts are Canadian dollar, Mexican peso, Chinese renminbi, Thai baht and Philippine peso.

Fair Value of Financial Instruments

The carrying amounts of cash and equivalents, trade receivables, accounts payable, and other accrued liabilities at December 31, 2025 and June 30, 2025 approximate fair value due to their short-term maturities.

The following table summarizes the estimated fair value of our long-term obligations and other short-term borrowings compared to the respective carrying amounts at:

The fair value of our long-term obligations and other short-term borrowings is estimated based on either the quoted market prices for the same or similar issues or other inputs derived from available market information, which represents a Level 2 measurement.

10. Shareholders' Deficit

We repurchased $750 million and $375 million of our common shares, in the aggregate, through share repurchase programs during the six months ended December 31, 2025 and 2024, respectively. We funded the repurchases with available cash. The common shares repurchased are held in treasury to be used for general corporate purposes.

The following table presents the share repurchase programs executed during the six months ended December 31, 2025 and 2024:

During the six months ended December 31, 2025 and 2024, we paid $8 million and $15 million for excise taxes, respectively, related to the completion of prior Accelerated Share Repurchase programs.

During the three months ended December 31, 2024, we retired 56 million of common stock shares without par value.

Notes to Financial Statements

Accumulated Other Comprehensive Loss

The following tables summarize the changes in the balance of accumulated other comprehensive loss by component and in total:

11. Earnings Per Share Attributable to Cardinal Health, Inc.

The following tables reconcile the number of common shares used to compute basic and diluted earnings per share attributable to Cardinal Health, Inc. ("EPS"):

For the three and six months ended December 31, 2025 and 2024, immaterial restricted share units and performance share units were excluded from the computation of diluted EPS, as they were anti-dilutive.

12. Segment Information

We operate undertwo reportable segments: Pharmaceutical and Specialty Solutions ("Pharma") and Global Medical Products and Distribution ("GMPD"). All remaining operating segments that are not significant enough to require separate reportable segment disclosures are included in Other, which is comprised of Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight® Logistics. The factors for determining the reportable segments include the manner in which management evaluates performance for purposes of allocating resources and assessing performance combined with the nature of the individual business activities.

Our Pharma segment distributes branded and generic pharmaceutical, specialty pharmaceutical and over-the-counter healthcare and consumer products in the United States. This segment also provides services to pharmaceutical manufacturers and healthcare providers for specialty pharmaceutical products; provides pharmacy management services to hospitals and operates a limited number of pharmacies, including pharmacies in community health centers; repackages generic pharmaceuticals and over-the-counter healthcare products; and includes our managed services organization platforms for physician offices.

Our GMPD segment manufactures, sources and distributes Cardinal Health branded medical, surgical and laboratory products, which are sold in the United States, Canada, Europe, Asia and other markets. This segment also distributes a broad range of medical, surgical, and laboratory products known as national brand products to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers in the United States and Canada.

The remaining three non-reportable operating segments included in Other are Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight® Logistics. These operating segments respectively operate nuclear pharmacies and radiopharmaceutical manufacturing facilities, distribute medical products to patients' homes in the United States, and provide supply chain services and solutions to our customers.

Notes to Financial Statements

Revenue

The following tables present revenue for the two reportable segments and disaggregated revenue within the remaining operating segments, included in Other, and Corporate:

(1)Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments.

The following tables present revenue by geographic area:

(1)Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments.

Segment Profit

The Company's Chief Executive Officer, the chief operating decision maker ("CODM"), evaluates segment performance based on segment profit, among other measures. Segment profit is segment revenue, less segment cost of products sold, less segment distribution, selling, general and administrative ("SG&A") expenses. Segment SG&A expenses include share-based compensation expense as well as allocated corporate technology and shared function expenses, including corporate management, corporate finance, financial and customer care shared services, human resources, information technology and legal and compliance, including certain litigation defense costs. Corporate expenses are allocated to the operating segments based on headcount, level of benefit provided and other ratable allocation methodologies. The results attributable to noncontrolling interests are recorded within segment profit.

We do not allocate the following items to our segments:

•last-in first-out, or ("LIFO"), inventory charges/(credits);

•state opioid assessment related to prior fiscal years;

•restructuring and employee severance;

•amortization and other acquisition-related costs;

•acquisition-related cash and share-based compensation costs;

•impairments and (gain)/loss on disposal of assets, net;

•litigation (recoveries)/charges, net;

•other (income)/expense, net;

•interest expense, net;

•provision for/(benefit from) income taxes

In addition, certain investment spending, certain portions of enterprise-wide incentive compensation and other spending are not allocated to the segments. Investment spending generally includes the first-year spend for certain projects that require incremental investments in the form of additional operating expenses. Because approval for these projects is dependent on executive management, we retain these expenses at Corporate. Investment spending within Corporate was $15 million for both the three months ended December 31, 2025 and 2024, respectively, and $31 million and $27 million for the six months ended December 31, 2025 and 2024, respectively.

Notes to Financial Statements

The following tables present segment profit for the two reportable segments and the remaining operating segments, included in Other:

(1)Corporate consists of the elimination of inter-segment revenue and other revenue and expenses not allocated to the segments.

Segment Assets

The following table presents total assets for the two reportable segments and the remaining operating segments, included in Other, and Corporate:

The following tables present depreciation and amortization for the two reportable segments and the remaining operating segments, included in Other, and Corporate:

Notes to Financial Statements

The following tables present additions to property and equipment for the two reportable segments and the remaining operating segments, included in Other, and Corporate:

The following table presents property and equipment, net by geographic area:

13. Share-Based Compensation

We maintain Cardinal Health Inc. corporate stock incentive plans (collectively, the “Plans”) for the benefit of certain of our officers, directors, and employees. As of December 31, 2025, we have 16 million shares authorized for issuance under the Plans. Upon vesting these units convert to common shares without restrictions or future service requirements.

The following tables provide total share-based compensation expense by type of award:

The total tax benefit related to share-based compensation was $4 million for both the three months ended December 31, 2025

and 2024, respectively, and $7 million and for both the six months ended December 31, 2025 and 2024, respectively. Share-based compensation expense is included in selling, general, and administrative expenses in the condensed consolidated statements of earnings. Our condensed consolidated statements of cash flows present our share-based compensation expense as a reconciling adjustment between net income and net cash provided by operating activities for all periods presented.

Restricted Share Units

Restricted share units granted under the Plans generally vest in equal annual installments over three years. Restricted share units accrue cash dividend equivalents that are payable upon vesting of the awards.

The following table summarizes all transactions related to restricted share units under the Plans:

The total fair value of units vested during both the three months ended December 31, 2025 and 2024 were $3 million. The total fair value of units vested during both the six months ended December 31, 2025 and 2024 were $56 million.

At December 31, 2025, the total pre-tax compensation cost, net of estimated forfeitures, related to nonvested restricted share units not yet recognized was $98 million, which is expected to be recognized over a weighted-average period oftwo years.

Performance Share Units

Performance share units vest over athree-year performance period based on achievement of specific performance goals. Based on the extent to which the targets are achieved and our total shareholder return relative to the S&P 500 Health Care Index, vested shares may range from zero to 240 percent of the target award amount. Performance share units accrue cash dividend equivalents that are payable upon vesting of the awards.

Notes to Financial Statements

The following table summarizes all transactions related to performance share units under the Plans (based on target award amounts):

No performance share units vested during the three months ended December 31, 2025 and 2024. The total fair value of units vested during the six months ended December 31, 2025 and 2024 were $108 million and $49 million, respectively.

At December 31, 2025, the total pre-tax compensation cost, net of estimated forfeitures, related to nonvested performance share units not yet recognized was $63 million, which is expected to be recognized over a weighted-average period oftwo years if the performance goals are achieved.

The Specialty Alliance Share-Based Compensation

The Specialty Alliance, a majority-owned subsidiary of Cardinal Health, maintains standalone share-based compensation plans. Share-based compensation expense associated with these awards of $56 million and $119 million was recognized during the three and six months ended December 31, 2025 respectively. Of the expense recognized for the three and six months ended December 31, 2025, $54 million and $115 million is included in acquisition-related cash and share-based compensation costs and $2 million and $4 million is included in selling, general, and administrative expenses in the condensed consolidated statements of earnings, respectively. The liability and associated future expenses may vary based on the changes in the estimated fair value.

The following table summarizes the fair market value of The Specialty Alliance Units as of December 31, 2025:

The total fair value of The Specialty Alliance Units vested during the three and six months ended December 31, 2025 was $66 million and $119 million, respectively. During the three months ended December 31, 2025, we recognized a decrease in the fair value of the liability, resulting in income of $10 million related to the vested Specialty Alliance Units, which is recognized in acquisition-

related cash and share-based compensation costs. There was no change in the fair value of the liability during the six months ended December 31, 2025.

At December 31, 2025, the total pre-tax compensation cost related to nonvested Specialty Alliance Units not yet recognized was $531 million, which is expected to be recognized over a weighted-average period of approximately three years.